GLOBAL - The merger between the Bank of New York and Mellon Financial Corporation will have a minimal impact on the firms' respective asset management divisions, with the vast majority of the 3900 planned job cuts coming from elsewhere, according to John Little, chief executive of Mellon Global Investments.
The new company - The Bank of New York Mellon Corporation - is the result of a planned merger announced today which will see the firm rank among the top 10 global asset managers with over US$1.1trn in assets under management.
The merger is expected to reduce total pre-tax costs by approximately $700m per year - around 8.5% of the estimated 2006 combined expense base. The companies said the transaction would involve restructuring charges of approximately $1.3bn, while their combined employee base of 40,000 would be reduced over a three-year period following the transaction.
Mellon's Little explained the firms would deliberately keep the maximum disruption away from the asset management division.
"The staff cuts won't really come from there," he said. "Both sides are pretty profitable, so the intention is to just have them continue to grow. What is nice is [the BNY asset management arm] is run in the same way as ours - a series of individual firms, which are run as independent entities.
"So we will simply run those in exactly the same way. In six-12 months down the line, most people working there won't notice much of a change, except maybe a change of logo on their cards, and maybe a change in some of the people who they deal with in the wider organisation."
Little added that the real integration would be in the asset servicing business and also the shared services.
As part of the merger, Thomas Renyi, currently chairman and chief executive of BNY, will serve as executive chairman of The Bank of New York Mellon Corporation for 18 months following the close of the transaction, with overall responsibility for the integration of the two companies.
Robert Kelly, currently president, chairman and CEO of Mellon, will serve as chief executive officer of the new company and will succeed Renyi as chairman of the board.
Gerald Hassell, currently president of BNY, will hold the same position in the new company. The board of directors will be comprised 10 members designated by BNY and eight members designated by Mellon, with the new company’s headquarters based in New York.
BNY said its shareholders would receive 0.9434 shares in the new company for each share of The Bank of New York that they owned, while Mellon shareholders would receive one share in the new company for each Mellon share they owned.
While the merger is expected to be completed by around July, Little stressed the integration process would be carried out slowly and methodically in a bid to retain all existing clients.
"After July, the real integration starts, and it could take as long as 30 months to complete," he said. "If we go slower, we may get costs savings more slowly, but we won't lose clients along the way, as mergers make people very nervous."
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